\u3000\u3 Guocheng Mining Co.Ltd(000688) 083 Zwsoft Co.Ltd(Guangzhou)(688083) )
China’s industrial software leader, which has been deeply cultivated for 20 years, has comprehensively laid out CAX product line. The company is a rare market leader in CAX field in China. It has been deeply engaged in CAX field for more than 20 years. At present, it has formed a product system composed of 2D / 3D CAD and CAE, and has a comprehensive layout in the field of enterprise and education. The company’s main revenue comes from CAD business, of which 2D / 3D revenue ratio is about 3:1, and CAE products begin to form small-scale revenue. The company has invested heavily in R & D, with an average annual R & D expense rate of more than 30% and R & D personnel accounting for more than 40%. Since 2016, the company has achieved high-quality revenue and profit performance. From 2016 to 2021, the company’s revenue CAGR was 34.9% and the net profit attributable to the parent company CAGR was 51.7%.
China’s huge industrial and manufacturing market supports a broad space for the development of industrial software. China has a 30 trillion level industrial and manufacturing market, accounting for 20% – 30% of the global share, and has maintained a compound growth rate of more than 10% in the past 15 years, which is higher than that of the whole world. However, in 2020, the scale of China’s industrial software market was only about 200 billion yuan, accounting for only 6.6% of the global proportion. The corresponding CAD / CAE markets were 4 billion yuan / 3.2 billion yuan respectively, which could not match China’s huge industrial manufacturing market. In the future, driven by the upgrading of manufacturing industry and supported by the national industrial software policy, China’s industrial software represented by CAD / CAE will usher in greater development opportunities. Our calculation results show that by 2035, China’s CAD market will be about 16 billion yuan, CAE market will be about 20 billion yuan and generalized PLM will be about 134 billion yuan.
The short, medium and long-term growth drivers of the company are clear, and it is expected to maintain a good growth attribute. 1) In the short and medium term, the core growth factor of the company lies in the domestic substitution under the upgrading of manufacturing industry. The transformation and upgrading of the manufacturing industry will increase the downstream demand for CAx and other industrial software, and the penetration rate and value will continue to rise; The legalization of software urges the downstream to give priority to domestic software with similar performance and low cost, so as to enlarge the effective market scale; The domestic substitution with Xinchuang as the core continues to accelerate, and the market share of domestic software will continue to increase. As the leader of domestic CAX industrial software, the company has the technical advantages of high autonomy and high threshold and strong direct sales channel ability, which will fully benefit from the development of the industry. 2) In the medium and long term, the company is continuously committed to building a CAX integrated solution system and expanding the market field; After the products are more recognized by the market and the product power is improved, the company may also learn from the development experience of overseas friends and start the transformation to cloud service manufacturers; Since 2004, the company has always adhered to the global development layout strategy and moved forward to a leading CAX service provider with global integration of “R & D + sales”.
Profit forecast and investment suggestions: it is estimated that the total revenue of the company from 2022 to 2024 will be 832 / 1124 / 1518 million yuan respectively, the net profit attributable to the parent company will be 232 / 304 / 395 million yuan respectively, the EPS will be 3.74/4.91/6.37 yuan respectively, and the corresponding PE will be 53 / 41 / 31 times respectively. Based on the stable growth of the company and the leading position in the field of domestic substitution of industrial software, it is covered for the first time and given a “buy” rating.
Risk warning: the risk of interruption of supply of core technology authorization; Risks of intensified industry competition; Product R & D is not as expected; The public data used in the research report may have the risk of information lag or untimely update; Industry scale measurement deviation risk, etc.
